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8-K - LIVE FILING - FAIRCHILD SEMICONDUCTOR INTERNATIONAL INC | htm_52389.htm |
Fairchild Updates Third Quarter 2015 Guidance Range and Announces Significant Reduction in Operating Expenses
SAN JOSE, Calif. September 9, 2015 - Fairchild (NASDAQ: FCS), a leading global supplier of power semiconductors, today updated its guidance range for the third quarter of 2015. Fairchild now expects third quarter sales to be approximately $340 million compared to the previous range of $355 to $375 million. Adjusted gross margin is expected to be within the previous guidance range of 34.0 to 35.0 percent. Operating expenses are now forecast to be $90 to $92 million compared to the previous guidance of $95 to $97 million.
Fairchild also announced today it has initiated a program to structurally reduce operating expenses by approximately $30 to $34 million annually which is expected to be implemented by the middle of the fourth quarter of 2015. This is a structural change to the operating expense level of the company and the anticipated savings contain no temporary measures. The company expects to incur approximately $13 million of severance expenses in the third quarter associated with this program.
Given the incrementally weaker demand environment, we are taking decisive steps to reduce operating expenses to our target model of 25 percent of sales at the current revenue level, said Mark Thompson, Fairchilds chairman, president and CEO. We also completed our manufacturing consolidation on schedule this quarter which we expect will drive substantial cost savings. These structural improvements in both manufacturing and operating costs give us greater confidence that we can achieve our target business model in 2016.
Adjusted gross margin is a non-GAAP financial measure and should not be considered a replacement for gross margin or other measures prepared in accordance with GAAP. See additional information on our non-GAAP financial measures included in our most recent 10Q SEC filing.
Special Note on Forward Looking Statements:
This press release contains forward-looking statements that are based on managements assumptions
and expectations and involve risk and uncertainty. Forward-looking statements usually, but do not
always, contain forward-looking terminology such as we believe, we expect, or we anticipate,
or refer to managements expectations about Fairchilds future performance. Many factors could
cause actual results to differ materially from those expressed in forward-looking statements. Among
these factors are the following: failure to achieve expected savings from cost reduction actions or
other unexpected or adverse results from those actions; the inability to attract and retain key
management and other employees; failure to maintain order rates at expected levels; changes in
demand for our products; changes in inventories at our customers and distributors; technological
and product development risks, including the risks of failing to maintain the right to use some
technologies or failing to adequately protect our own intellectual property against
misappropriation or infringement; availability of manufacturing capacity; the risk of production
delays; availability of raw materials at competitive prices; competitors actions; loss of key
customers, including but not limited to distributors; order cancellations or reduced bookings;
changes in manufacturing yields or output; risks related to warranty and product liability claims;
risks inherent in doing business internationally; changes in tax regulations or the migration of
profits from lower tax jurisdictions to higher tax jurisdictions; regulatory risks and significant
litigation. These and other risk factors are discussed in the companys quarterly and annual
reports filed with the Securities and Exchange Commission (SEC) and available at the Investor
Relations section of Fairchilds web site at
investor.fairchildsemi.com or the SECs web site at www.sec.gov.
Editorial Contacts
Dan Janson Investor Relations
(207) 775-8660
investor@fairchildsemi.com